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Heartland Financial USA, Inc. ("HTLF") Reports Quarterly and Year to Date Results as of September 30, 2022

Highlights and Developments
Quarterly loan growth of $254.8 million or 2%, exclusive of Paycheck Protection Program ("PPP") loans
Total revenue growth of $8.1 million or 5% during the quarter to $185.1 million
Quarterly net income available to common stockholders of $54.6 million
Efficiency ratio of 55.26%
Diluted earnings per common share of $1.28
Quarterly net charge-offs of $26,000 and 30-89 day loan delinquencies were 0.10% of total loans
Completed the consolidation of two bank charters during the quarter, and one charter consolidation completed subsequent to the end of the quarter


 Quarter Ended
September 30,
 Nine Months Ended
September 30,
  2022   2021   2022   2021 
Net income available to common stockholders (in millions)$54.6  $53.9  $145.5  $164.3 
Diluted earnings per common share 1.28   1.27   3.42   3.88 
        
Return on average assets 1.13%  1.19%  1.04%  1.25%
Return on average common equity 12.93   10.32   10.80   10.95 
Return on average tangible common equity (non-GAAP)(1) 20.76   15.14   16.79   16.34 
Net interest margin 3.41   3.30   3.22   3.37 
Net interest margin, fully tax-equivalent (non-GAAP)(1) 3.45   3.34   3.27   3.41 
Efficiency ratio, fully-tax equivalent (non-GAAP)(1) 55.26   60.38   58.99   58.05 
(1) Refer to "Non-GAAP Measures" in this earnings release for additional information on the usage and presentation of these non-GAAP measures, and refer to the financial tables for reconciliations to the most directly comparable GAAP measures.


"HTLF completed another successful quarter as we continue to execute on our growth and efficiency strategies. Our third quarter results were highlighted by an improved efficiency ratio, solid loan growth and clean credit metrics."
Bruce K. Lee, president and chief executive officer, HTLF

DUBUQUE, Iowa, Oct. 31, 2022 (GLOBE NEWSWIRE) -- Heartland Financial USA, Inc. (NASDAQ: HTLF) today reported the following results for the quarter ended September 30, 2022 compared to the quarter ended September 30, 2021:

  • Net income available to common stockholders of $54.6 million compared to $53.9 million, an increase of $640,000 or 1%.
  • Earnings per diluted common share of $1.28 compared to $1.27, an increase of $0.01 or 1%.
  • Net interest income of $155.9 million compared to $142.6 million, an increase of $13.3 million or 9%.
  • Return on average assets was 1.13% compared to 1.19%.
  • Return on average common equity was 12.93% compared to 10.32%.
  • Return on average tangible common equity (non-GAAP) was 20.76% compared to 15.14%.

"HTLF completed another successful quarter as we continue to execute on our growth and efficiency strategies. Our third quarter results were highlighted by an improved efficiency ratio, solid loan growth and clean credit metrics," said Bruce K. Lee, president and chief executive officer of HTLF.

HTLF reported the following results for the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021:

  • Net income available to common stockholders of $145.5 million compared to $164.3 million, a decrease of $18.8 million or 11%.
  • Earnings per diluted common share of $3.42 compared to $3.88, a decrease of $0.46 or 12%.
  • Net interest income of $433.0 million compared to $423.4 million, an increase of $9.7 million or 2%.
  • Return on average assets was 1.04% compared to 1.25%.
  • Return on average common equity was 10.80% compared to 10.95%.
  • Return on average tangible common equity (non-GAAP) was 16.79% compared to 16.34%.

Charter Consolidation Update

During the third quarter of 2022, the charters of Premier Valley Bank and Minnesota Bank & Trust were consolidated into HTLF Bank. Subsequent to September 30, 2022, the Arizona Bank & Trust charter was consolidated into HTLF Bank. Citywide Banks, Premier Valley Bank, Minnesota Bank & Trust and Arizona Bank & Trust are now operating as divisions of HTLF Bank. During the fourth quarter of 2022, one additional charter consolidation is expected to be completed, and the remaining six charters are expected to be consolidated by the end of 2023. Charter consolidation follows a template that retains the current brands, local leadership and local decision making.

Consolidation restructuring costs are projected to be $19-$20 million with approximately $12-$13 million of expenses remaining to be incurred through 2023. Charter consolidation is designed to eliminate redundancies and improve HTLF’s operating efficiency and capacity to support ongoing product and service enhancements, as well as current and future growth. HTLF realized some operating efficiency and financial benefits in the third quarter of 2022 with the completion of two charter consolidations, and total benefits are estimated to be approximately $20.0 million annually after the project is completed.

Net Interest Income and Net Interest Margin

Net interest margin, expressed as a percentage of average earning assets, was 3.41% (3.45% on a fully tax-equivalent basis, non-GAAP) for the third quarter of 2022 compared to 3.30% (3.34% on a fully tax-equivalent basis, non-GAAP) for the third quarter of 2021.

Total interest income and average earning asset changes for the third quarter of 2022 compared to the third quarter of 2021 were:

  • Total interest income was $175.8 million compared to $149.2 million, which was an increase of $26.6 million or 18% and primarily attributable to an increase in average earning assets and higher yields partially offset by a reduction of PPP loan interest income. PPP loan interest income totaled $363,000 compared to $11.2 million, which was a decrease of $10.8 million or 97%.
  • Total interest income on a tax-equivalent basis (non-GAAP) was $178.0 million, which was an increase of $27.1 million or 18% from $150.9 million.
  • Average earning assets increased $1.03 billion or 6% to $18.16 billion compared to $17.12 billion.
  • The average rate on earning assets increased 39 basis points to 3.89% compared to 3.50%, which was primarily due to recent interest rate increases.

Total interest expense and average interest bearing liability changes for the third quarter of 2022 compared to the third quarter of 2021 were:

  • Total interest expense was $19.9 million, an increase of $13.3 million from $6.6 million, based on an increase in the average interest rate paid and an increase in average interest bearing liabilities.
  • The average interest rate paid on interest bearing liabilities increased to 0.67% compared to 0.27%.
  • Average interest bearing deposits increased $1.76 billion or 19% to $11.22 billion from $9.46 billion.
  • The average interest rate paid on interest bearing deposits increased 40 basis points to 0.54% compared to 0.14%.
  • Average borrowings increased $86.6 million or 21% to $506.5 million from $419.9 million, and the average interest rate paid on borrowings was 3.74% compared to 3.02%.

Net interest income changes for the third quarter of 2022 compared to the third quarter of 2021 were:

  • Net interest income totaled $155.9 million compared to $142.5 million, which was an increase of $13.3 million or 9%.
  • Net interest income on a tax-equivalent basis (non-GAAP) totaled $158.0 million compared to $144.3 million, which was an increase of $13.8 million or 10%.

Noninterest Income and Noninterest Expense

Total noninterest income was $29.2 million during the third quarter of 2022 compared to $32.7 million during the third quarter of 2021, a decrease of $3.5 million or 11%. Significant changes within the noninterest income category for the third quarter of 2022 compared to the third quarter of 2021 were:

  • Service charges and fees increased $1.7 million or 11% to $17.3 million from $15.1 million, which was primarily attributable to an increase of $1.2 million or 25% in credit card revenue to $6.2 million compared to $5.0 million.
  • Net security losses totaled $1.1 million compared to net gains of $1.5 million.
  • Net gains on sales of loans held for sale totaled $1.8 million compared to $5.3 million, which was a decrease of $3.4 million or 65% and was primarily attributable to a decrease of loans sold to the secondary market.
  • Other noninterest income totaled $3.8 million compared to $1.2 million, which was an increase of $2.5 million and was primarily attributable to an increase in commercial swap fees and syndication income to $1.8 million from $131,000.  

Total noninterest expense was $108.9 million during the third quarter of 2022 compared to $110.6 million during the third quarter of 2021, which was a decrease of $1.7 million or 2%. Significant changes within the noninterest expense category for the third quarter of 2022 compared to the third quarter of 2021 were:

  • Salaries and employee benefits totaled $62.7 million compared to $60.7 million, which was an increase of $2.0 million or 3%. The increase was primarily attributable to higher incentive compensation expenses.
  • Acquisition, integration and restructuring costs totaled $2.2 million compared to $204,000, an increase of $2.0 million due to the progression of the charter consolidation project.
  • Partnership investment in tax credit projects decreased $1.4 million or 59% to $979,000 from $2.4 million.
  • Occupancy expense decreased $572,000 or 8% to $6.8 million from $7.4 million, and furniture and equipment expense decreased $437,000 or 13% to $2.9 million from $3.4 million. These decreases are primarily attributable to the reduction in branch locations. Branch locations totaled 121 at September 30, 2022, compared to 131 at September 30, 2021.

The effective tax rate was 19.97% for the third quarter of 2022 compared to 19.15% for the third quarter of 2021. The following items impacted the third quarter 2022 and 2021 tax calculations:

  • Solar energy tax credits of $1.1 million compared to $2.1 million.
  • Federal low-income housing tax credits of $519,000 compared to $135,000.
  • New markets tax credits of $75,000 in each quarterly calculation.
  • Historic rehabilitation tax credits of $63,000 compared to $327,000.
  • Tax-exempt interest income as a percentage of pre-tax income of 11.45% compared to 9.32%.

Total Assets, Total Loans and Total Deposits

Total assets were $19.68 billion at September 30, 2022, an increase of $408.4 million or 2% from $19.27 billion at year-end 2021. Securities represented 35% and 40% of total assets at September 30, 2022, and December 31, 2021, respectively.

During the third quarter of 2022, HTLF transferred taxable municipal bonds with a book value of $934.5 million and a fair value of $748.3 million from the available for sale portfolio to the held to maturity portfolio.

Total loans held to maturity were $10.92 billion at September 30, 2022, compared to $9.95 billion at December 31, 2021, which was an increase of $969.0 million or 10%. Excluding total PPP loans, loans increased $254.8 million or 2% since June 30, 2022 and $1.16 billion or 12% since December 31, 2021.

Significant changes by loan category at September 30, 2022 compared to June 30, 2022 included:

  • Commercial and business lending, which includes commercial and industrial, PPP and owner occupied commercial real estate loans, increased $212.8 million or 4% to $5.58 billion compared to $5.37 billion.
    • PPP loans originated in 2020 ("PPP I") decreased $883,000 or 32%. PPP loans originated in 2021 ("PPP II") decreased $8.6 million or 43%.
    • Excluding total PPP loans, commercial and business lending increased $222.3 million or 4% to $5.56 billion from $5.34 billion.
  • Commercial real estate lending, which includes non-owner occupied commercial real estate and construction loans, increased $48.8 million or 2% to $3.22 billion compared to $3.17 billion.
  • Agricultural and agricultural real estate loans decreased $55.3 million or 7% to $781.4 million compared to $836.7 million.
  • Consumer loans increased $31.4 million or 7% to $495.5 million from $464.1 million.

Significant changes by loan category at September 30, 2022 compared to December 31, 2021 included:

  • Commercial and business lending, which includes commercial and industrial, PPP and owner occupied commercial real estate loans, increased $492.9 million or 10% to $5.58 billion compared to $5.09 billion.
    • PPP I loans decreased $25.2 million or 93%. PPP II loans decreased $161.1 million or 93%.
    • Excluding total PPP loans, commercial and business lending increased $679.3 million or 14% to $5.56 billion from $4.89 billion.
  • Commercial real estate lending, which includes non-owner occupied commercial real estate and construction loans, increased $348.8 million or 12% to $3.22 billion compared to $2.87 billion.
  • Agricultural and agricultural real estate loans increased $27.6 million or 4% to $781.4 million compared to $753.8 million.
  • Consumer loans increased $76.0 million or 18% to $495.5 million from $419.5 million.

Total deposits were $17.27 billion as of September 30, 2022, compared to $16.42 billion at December 31, 2021. Significant deposit changes by category at September 30, 2022 compared to December 31, 2021 included:

  • Demand deposits decreased $411.8 million or 6% to $6.08 billion compared to $6.50 billion.
  • Savings deposits increased $1.16 billion or 13% to $10.06 billion from $8.90 billion.

Provision and Allowance

Provision and Allowance for Credit Losses for Loans
Provision for credit losses for loans for the third quarter of 2022 was $4.4 million, which was an increase of $8.8 million from a provision benefit of $4.4 million recorded in the third quarter of 2021. The provision expense for the third quarter of 2022 reflects a stable credit environment with a deteriorating economic outlook due to the long-term impact of rising interest rates and record high inflation. The provision benefit recorded in the third quarter of 2021 reflected an improving credit environment coming off elevated COVID reserving levels with an improving economic outlook due to waning COVID concerns.

The allowance for credit losses for loans totaled $105.7 million and $110.1 million at September 30, 2022, and December 31, 2021, respectively. The following items impacted the allowance for credit losses for loans at September 30, 2022:

  • Provision expense for the nine months ended September 30, 2022, totaled $8.6 million.
  • Net charge offs of $12.9 million were recorded for the first nine months of 2022.
  • Nonpass loans declined to 5.3% of total loans compared to 7.4% of total loans at December 31, 2021.

Provision and Allowance for Credit Losses for Unfunded Commitments
The allowance for unfunded commitments totaled $18.9 million at September 30, 2022, which was an increase of $3.4 million from $15.5 million at December 31, 2021. Unfunded commitments increased $834.2 million to $4.66 billion at September 30, 2022 compared to $3.83 billion at December 31, 2021.

Total Provision and Allowance for Lending Related Credit Losses
The total provision expense for lending related credit losses was $5.5 million for the third quarter of 2022 compared to provision benefit of $4.5 million for the third quarter of 2021. The total allowance for lending related credit losses was $124.6 million or 1.14% of total loans at September 30, 2022, compared to $125.6 million or 1.26% of total loans as of December 31, 2021.

Nonperforming Assets

Nonperforming assets increased $1.4 million or 2% to $73.3 million or 0.37% of total assets at September 30, 2022, compared to $71.9 million or 0.37% of total assets at December 31, 2021. Nonperforming loans were $65.2 million or 0.60% of total loans at September 30, 2022, compared to $69.9 million or 0.70% of total loans at December 31, 2021. At September 30, 2022, loans delinquent 30-89 days were 0.10% of total loans compared to 0.07% of total loans at December 31, 2021.

Non-GAAP Financial Measures
This earnings release contains references to financial measures which are not defined by generally accepted accounting principles ("GAAP"). Management believes the non-GAAP measures are helpful for investors to analyze and evaluate the company's financial condition and operating results. However, these non-GAAP measures have inherent limitations and should not be considered a substitute for operating results determined in accordance with GAAP. Additionally, because non-GAAP measures are not standardized, it may not be possible to compare the non-GAAP measures in this earnings release with other companies' non-GAAP measures. Reconciliations of each non-GAAP measure to the most directly comparable GAAP measure may be found in the financial tables in this earnings release.

Below are the non-GAAP measures included in this earnings release, management's reason for including each measure and the method of calculating each measure:

  • Annualized net interest margin, fully tax-equivalent, adjusts net interest income for the tax-favored status of certain loans and securities. Management believes this measure enhances the comparability of net interest income arising from taxable and tax-exempt sources.
  • Efficiency ratio, fully tax equivalent, expresses noninterest expenses as a percentage of fully tax-equivalent net interest income and noninterest income. This efficiency ratio is presented on a tax-equivalent basis which adjusts net interest income and noninterest expenses for the tax favored status of certain loans, securities, and tax credit projects. Management believes the presentation of this non-GAAP measure provides supplemental useful information for proper understanding of the financial results as it enhances the comparability of income and expenses arising from taxable and nontaxable sources and excludes specific items as noted in reconciliation contained in this earnings release.
  • Net interest income, fully tax equivalent, is net income adjusted for the tax-favored status of certain loans and securities. Management believes this measure enhances the comparability of net interest income arising from taxable and tax-exempt sources.
  • Tangible book value per common share is total common equity less goodwill and core deposit and customer relationship intangibles, net, divided by common shares outstanding, net of treasury. This measure is included as it is considered to be a critical metric to analyze and evaluate use of equity, financial condition and capital strength.
  • Tangible common equity ratio is total common equity less goodwill and core deposit and customer relationship intangibles, net, divided by total assets less goodwill and core deposit and customer relationship intangibles, net. This measure is included as it is considered to be a critical metric to analyze and evaluate financial condition and capital strength.
  • Annualized return on average tangible common equity is net income excluding intangible amortization calculated as (1) net income excluding tax-effected core deposit and customer relationship intangibles amortization, divided by (2) average common equity less goodwill and core deposit and customer relationship intangibles, net. This measure is included as it is considered to be a critical metric to analyze and evaluate use of equity, financial condition and capital strength.
  • Annualized ratio of core expenses to average assets adjusts noninterest expenses to exclude specific items noted in the reconciliation. Management includes this measure as it is considered to be a critical metric to analyze and evaluate controllable expenses related to primary business operations.

Conference Call Details
HTLF will host a conference call for shareholders, analysts and other interested parties at 5:00 p.m. EDT today. To join via webcast, please visit https://ir.htlf.com/news-and-events/event-calendar/default.aspx 10 minutes prior to the call. A replay will be available until October 30, 2023, by logging on to www.htlf.com.

About HTLF
Heartland Financial USA, Inc., operating under the brand name HTLF, is a financial services company with assets of $19.68 billion. HTLF has banks serving communities in Arizona, California, Colorado, Illinois, Iowa, Kansas, Minnesota, Missouri, Montana, New Mexico, Texas and Wisconsin. HTLF is committed to its core commercial business, supported by a strong retail operation, and provides a diversified line of financial services including treasury management, wealth management, investments and residential mortgage. Additional information is available at www.htlf.com.

Safe Harbor Statement
This release (including any information incorporated herein by reference) and future oral and written statements of HTLF and its management, may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, with respect to the business, financial condition, results of operations, plans, objectives and future performance of HTLF.

Any statements about HTLF's expectations, beliefs, plans, objectives, assumptions or future events or performance are not historical facts and may be forward-looking. Forward-looking statements may include information about possible or assumed future results of HTLF's operations or performance, and may be based upon beliefs, expectations and assumptions of HTLF's management. These forward-looking statements are generally identified by the use of the words such as "believe", "expect", "anticipate", "plan", "intend", "estimate", "project", "may", "will", "would", "could", "should", "may", "view", "opportunity", "potential", or similar or negative expressions of these words or phrases that are used in this release, and future oral and written statements of HTLF and its management. Although HTLF may make these statements based on management’s experience, beliefs, expectations, assumptions and best estimate of future events, the ability of HTLF to predict results or the actual effect or outcomes of plans or strategies is inherently uncertain, and there may be events or factors that management has not anticipated. Therefore, the accuracy and achievement of such forward-looking statements and estimates are subject to a number of risks, many of which are beyond the ability of management to control or predict, that could cause actual results to differ materially from those in its forward-looking statements. These factors, which HTLF currently believes could have a material effect on its operations and future prospects, are detailed below and in the risk factors in HTLF's reports filed with the Securities and Exchange Commission ("SEC"), including the "Risk Factors" section under Item 1A of Part I of HTLF’s Annual Report on Form 10-K for the year ended December 31, 2021, include, among others:

  • Coronavirus Disease 2019 ("COVID-19") Pandemic Risks, including risks related to the ongoing COVID-19 pandemic and measures enacted by the U.S. federal and state governments and adopted by private businesses in response to the COVID-19 pandemic;
  • Economic and Market Conditions Risks, including risks related to changes in the U.S. economy in general and in the local economies in which HTLF conducts its operations and future civil unrest, natural disasters, terrorist threats or acts of war;
  • Credit Risks, including risks of increasing credit losses due to deterioration in the financial condition of HTLF's borrowers, changes in asset and collateral values and climate and other borrower industry risks which may impact the provision for credit losses and net charge-offs;
  • Liquidity and Interest Rate Risks, including the impact of capital market conditions and changes in monetary policy on our borrowings and net interest income;
  • Operational Risks, including processing, information systems, cybersecurity, vendor, business interruption, and fraud risks;
  • Strategic and External Risks, including economic, political and competitive forces impacting our business;
  • Legal, Compliance and Reputational Risks, including regulatory and litigation risks; and
  • Risks of Owning Stock in HTLF, including stock price volatility and dilution as a result of future equity offerings and acquisitions.

There can be no assurance that other factors not currently anticipated by HTLF will not materially and adversely affect HTLF's business, financial condition and results of operations. In addition, many of these risks and uncertainties are currently amplified by and may continue to be amplified by the COVID-19 pandemic and the impact of varying governmental responses that affect HTLF’s customers and the economies where they operate. Additionally, all statements in this release, including forward-looking statements speak only as of the date they are made. HTLF does not undertake and specifically disclaims any obligation to publicly release the results of any revisions which may be made to any forward-looking statement to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events or to otherwise update any statement in light of new information or future events. Further information concerning HTLF and its business, including additional factors that could materially affect HTLF’s financial results, is included in HTLF's filings with the SEC.

-FINANCIAL TABLES FOLLOW-

HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
 For the Quarter Ended
September 30,
 For the Nine Months Ended
September 30,
  2022   2021   2022   2021 
Interest Income       
Interest and fees on loans$122,913  $112,062  $334,000  $336,416 
Interest on securities:       
Taxable 45,648   32,384   116,366   94,373 
Nontaxable 6,164   4,609   17,874   13,673 
Interest on federal funds sold          1 
Interest on deposits with other banks and short-term investments 1,081   132   1,715   258 
Total Interest Income 175,806   149,187   469,955   444,721 
Interest Expense       
Interest on deposits 15,158   3,444   24,665   11,629 
Interest on short-term borrowings 360   98   494   348 
Interest on other borrowings 4,412   3,102   11,780   9,378 
Total Interest Expense 19,930   6,644   36,939   21,355 
Net Interest Income 155,876   142,543   433,016   423,366 
Provision (benefit) for credit losses 5,492   (4,534)  11,983   (12,262)
Net Interest Income After Provision (Benefit) for Credit Losses 150,384   147,077   421,033   435,628 
Noninterest Income       
Service charges and fees 17,282   15,551   50,599   44,354 
Loan servicing income 831   784   1,951   2,495 
Trust fees 5,372   6,221   17,130   18,037 
Brokerage and insurance commissions 649   866   2,357   2,584 
Securities gains/(losses), net (1,055)  1,535   (272)  4,347 
Unrealized gain/ (loss) on equity securities, net (211)  112   (615)  85 
Net gains on sale of loans held for sale 1,832   5,281   8,144   16,454 
Valuation adjustment on servicing rights    195   1,658   586 
Income on bank owned life insurance 694   940   1,741   2,706 
Other noninterest income 3,787   1,239   15,596   4,557 
Total Noninterest Income 29,181   32,724   98,289   96,205 
Noninterest Expense       
Salaries and employee benefits 62,661   60,689   192,867   177,083 
Occupancy 6,794   7,366   21,250   22,683 
Furniture and equipment 2,928   3,365   9,480   9,959 
Professional fees 16,277   17,242   47,420   46,969 
Advertising 1,554   1,921   4,392   5,039 
Core deposit and customer relationship intangibles amortization 1,856   2,295   5,993   7,226 
Other real estate and loan collection expenses, net 304   78   577   627 
(Gain)/loss on sales/valuations of assets, net (251)  (3)  (3,435)  374 
Acquisition, integration and restructuring costs 2,156   204   5,144   3,342 
Partnership investment in tax credit projects 979   2,374   1,793   3,754 
Other noninterest expenses 13,625   15,096   40,678   39,370 
Total Noninterest Expense 108,883   110,627   326,159   316,426 
Income Before Income Taxes 70,682   69,174   193,163   215,407 
Income taxes 14,118   13,250   41,637   45,064 
Net Income 56,564   55,924   151,526   170,343 
Preferred dividends (2,013)  (2,013)  (6,038)  (6,038)
Net Income Available to Common Stockholders$54,551  $53,911  $145,488  $164,305 
Earnings per common share-diluted$1.28  $1.27  $3.42  $3.88 
Weighted average shares outstanding-diluted 42,643,940   42,415,993   42,596,301   42,381,313 


HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
 For the Quarter Ended
 9/30/2022 6/30/2022 3/31/2022 12/31/2021 9/30/2021
Interest Income         
Interest and fees on loans$122,913  $108,718  $102,369  $107,721  $112,062 
Interest on securities:         
Taxable 45,648   38,098   32,620   30,637   32,384 
Nontaxable 6,164   5,508   6,202   5,595   4,609 
Interest on federal funds sold              
Interest on deposits with other banks and short-term investments 1,081   563   71   86   132 
Total Interest Income 175,806   152,887   141,262   144,039   149,187 
Interest Expense         
Interest on deposits 15,158   6,530   2,977   3,168   3,444 
Interest on short-term borrowings 360   88   46   123   98 
Interest on other borrowings 4,412   3,808   3,560   3,554   3,102 
Total Interest Expense 19,930   10,426   6,583   6,845   6,644 
Net Interest Income 155,876   142,461   134,679   137,194   142,543 
Provision (benefit) for credit losses 5,492   3,246   3,245   (5,313)  (4,534)
Net Interest Income After Provision (Benefit) for Credit Losses 150,384   139,215   131,434   142,507   147,077 
Noninterest Income         
Service charges and fees 17,282   18,066   15,251   15,349   15,551 
Loan servicing income 831   834   286   781   784 
Trust fees 5,372   5,679   6,079   6,380   6,221 
Brokerage and insurance commissions 649   839   869   962   866 
Securities gains/(losses), net (1,055)  (2,089)  2,872   1,563   1,535 
Unrealized gain/ (loss) on equity securities, net (211)  (121)  (283)  (27)  112 
Net gains on sale of loans held for sale 1,832   2,901   3,411   4,151   5,281 
Valuation adjustment on servicing rights       1,658   502   195 
Income on bank owned life insurance 694   523   524   1,056   940 
Other noninterest income 3,787   7,907   3,902   2,013   1,239 
Total Noninterest Income 29,181   34,539   34,569   32,730   32,724 
Noninterest Expense         
Salaries and employee benefits 62,661   64,032   66,174   63,031   60,689 
Occupancy 6,794   7,094   7,362   7,282   7,366 
Furniture and equipment 2,928   3,033   3,519   3,364   3,365 
Professional fees 16,277   15,987   15,156   17,631   17,242 
Advertising 1,554   1,283   1,555   2,218   1,921 
Core deposit and customer relationship intangibles amortization 1,856   2,083   2,054   2,169   2,295 
Other real estate and loan collection expenses, net 304   78   195   363   78 
(Gain)/loss on sales/valuations of assets, net (251)  (3,230)  46   214   (3)
Acquisition, integration and restructuring costs 2,156   2,412   576   1,989   204 
Partnership investment in tax credit projects 979   737   77   2,549   2,374 
Other noninterest expenses 13,625   12,970   14,083   14,576   15,096 
Total Noninterest Expense 108,883   106,479   110,797   115,386   110,627 
Income Before Income Taxes 70,682   67,275   55,206   59,851   69,174 
Income taxes 14,118   15,402   12,117   10,271   13,250 
Net Income 56,564   51,873   43,089   49,580   55,924 
Preferred dividends (2,013)  (2,012)  (2,013)  (2,012)  (2,013)
Net Income Available to Common Stockholders$54,551  $49,861  $41,076  $47,568  $53,911 
Earnings per common share-diluted$1.28  $1.17  $0.97  $1.12  $1.27 
Weighted average shares outstanding-diluted 42,643,940   42,565,391   42,540,953   42,479,442   42,415,993 


HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
 As of
 9/30/2022 6/30/2022 3/31/2022 12/31/2021 9/30/2021
Assets         
Cash and due from banks$250,394  $221,077  $198,559  $163,895  $192,247 
Interest bearing deposits with other banks and short-term investments 149,466   163,717   406,343   271,704   135,158 
Cash and cash equivalents 399,860   384,794   604,902   435,599   327,405 
Time deposits in other financial institutions 1,740   1,855   2,894   2,894   3,138 
Securities:         
Carried at fair value 6,060,331   7,106,218   7,025,243   7,530,374   7,449,936 
Held to maturity, at cost, less allowance for credit losses 830,247   81,939   81,785   84,709   85,354 
Other investments, at cost 80,286   85,899   82,751   82,567   83,332 
Loans held for sale 9,570   18,803   22,685   21,640   37,078 
Loans:         
Held to maturity 10,923,532   10,678,218   10,177,385   9,954,572   9,854,907 
Allowance for credit losses (105,715)  (101,353)  (100,522)  (110,088)  (117,533)
Loans, net 10,817,817   10,576,865   10,076,863   9,844,484   9,737,374 
Premises, furniture and equipment, net 203,585   206,818   213,752   215,827   221,996 
Goodwill 576,005   576,005   576,005   576,005   576,005 
Core deposit and customer relationship intangibles, net 26,995   28,851   30,934   32,988   35,157 
Servicing rights, net 8,379   8,288   8,102   6,890   6,351 
Cash surrender value on life insurance 193,184   192,474   192,267   191,722   190,576 
Other real estate, net 8,030   4,528   1,422   1,927   4,744 
Other assets 466,921   385,062   311,274   246,923   237,779 
Total Assets$19,682,950  $19,658,399  $19,230,879  $19,274,549  $18,996,225 
Liabilities and Equity         
Liabilities         
Deposits:         
Demand$6,083,563  $6,087,304  $6,376,249  $6,495,326  $6,537,722 
Savings 10,060,523   10,059,678   9,236,427   8,897,909   8,416,204 
Time 1,123,035   1,078,568   1,054,008   1,024,020   1,068,317 
Total deposits 17,267,121   17,225,550   16,666,684   16,417,255   16,022,243 
Short-term borrowings 147,000   97,749   107,372   131,597   265,620 
Other borrowings 371,446   372,538   372,290   372,072   371,765 
Accrued expenses and other liabilities 241,425   188,494   152,676   171,447   164,345 
Total Liabilities 18,026,992   17,884,331   17,299,022   17,092,371   16,823,973 
Stockholders' Equity         
Preferred equity 110,705   110,705   110,705   110,705   110,705 
Common stock 42,444   42,439   42,370   42,275   42,250 
Capital surplus 1,079,277   1,076,766   1,073,048   1,071,956   1,068,913 
Retained earnings 1,074,168   1,031,076   992,655   962,994   926,834 
Accumulated other comprehensive income (loss) (650,636)  (486,918)  (286,921)  (5,752)  23,550 
Total Equity 1,655,958   1,774,068   1,931,857   2,182,178   2,172,252 
Total Liabilities and Equity$19,682,950  $19,658,399  $19,230,879  $19,274,549  $18,996,225 


HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA AND FULL TIME EQUIVALENT EMPLOYEE DATA
 For the Quarter Ended
 9/30/2022 6/30/2022 3/31/2022 12/31/2021 9/30/2021
Average Balances         
Assets$19,775,341  $19,559,091  $19,229,872  $19,151,691  $18,608,775 
Loans, net of unearned 10,783,135   10,477,368   10,043,594   9,886,027   9,920,047 
Deposits 17,282,289   17,044,479   16,459,378   16,265,476   15,817,778 
Earning assets 18,157,795   17,987,734   17,757,067   17,681,917   17,123,824 
Interest bearing liabilities 11,723,026   11,575,319   10,453,400   10,207,255   9,881,350 
Common equity 1,674,306   1,731,393   2,003,424   2,061,973   2,072,593 
Total stockholders' equity 1,785,011   1,842,098   2,114,129   2,172,678   2,183,298 
Tangible common equity (non-GAAP)(1) 1,070,399   1,125,543   1,395,488   1,451,950   1,460,309 
          
Key Performance Ratios         
Annualized return on average assets 1.13%  1.06%  0.91%  1.03%  1.19%
Annualized return on average common equity (GAAP) 12.93   11.55   8.32   9.15   10.32 
Annualized return on average tangible common equity (non-GAAP)(1) 20.76   18.35   12.41   13.47   15.14 
Annualized ratio of net charge-offs/(recoveries) to average loans 0.00   0.03   0.49   0.03   (0.05)
Annualized net interest margin (GAAP) 3.41   3.18   3.08   3.08   3.30 
Annualized net interest margin, fully tax-equivalent (non-GAAP)(1) 3.45   3.22   3.12   3.12   3.34 
Efficiency ratio, fully tax-equivalent (non-GAAP)(1) 55.26   57.66   64.65   63.86   60.38 
Annualized ratio of total noninterest expenses to average assets (GAAP) 2.18   2.18   2.34   2.39   2.36 
Annualized ratio of core expenses to average assets (non-GAAP)(1) 2.09   2.14   2.28   2.25   2.25 


 For the Quarter Ended
September 30,
 For the Nine Months Ended
September 30,
  2022   2021   2022   2021 
Average Balances       
Assets$19,775,341  $18,608,775  $19,523,433  $18,291,444 
Loans, net of unearned 10,783,135   9,920,047   10,437,409   9,981,306 
Deposits 17,282,289   15,817,778   16,931,730   15,482,394 
Earning assets 18,157,795   17,123,824   17,969,001   16,803,740 
Interest bearing liabilities 11,723,026   9,881,350   11,255,232   9,889,806 
Common equity 1,674,306   2,072,593   1,801,835   2,006,123 
Total stockholders' equity 1,785,011   2,183,298   1,912,540   2,116,828 
Tangible common stockholders' equity 1,070,399   1,460,309   1,195,952   1,391,373 
        
Key Performance Ratios       
Annualized return on average assets 1.13%  1.19%  1.04%  1.25%
Annualized return on average common equity (GAAP) 12.93   10.32   10.80   10.95 
Annualized return on average tangible common equity (non-GAAP)(1) 20.76   15.14   16.79   16.34 
Annualized ratio of net charge-offs/(recoveries) to average loans 0.00   (0.05)  0.17   0.04 
Annualized net interest margin (GAAP) 3.41   3.30   3.22   3.37 
Annualized net interest margin, fully tax-equivalent (non-GAAP)(1) 3.45   3.34   3.27   3.41 
Efficiency ratio, fully tax-equivalent (non-GAAP)(1) 55.26   60.38   58.99   58.05 
Total noninterest expenses to average assets (GAAP) 2.18   2.36   2.23   2.31 
Core expenses to average assets (non-GAAP)(1) 2.09   2.25   2.17   2.21 
        
(1) Refer to "Non-GAAP Measures" in this earnings release for additional information on the usage and presentation of these non-GAAP measures, and refer to these financial tables for the reconciliations to the most directly comparable GAAP measures.


HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE AND FULL TIME EQUIVALENT EMPLOYEE DATA
 As of and for the Quarter Ended
 9/30/2022 6/30/2022 3/31/2022 12/31/2021 9/30/2021
Common Share Data         
Book value per common share$36.41  $39.19  $42.98  $49.00  $48.79 
Tangible book value per common share (non-GAAP)(1)$22.20  $24.94  $28.66  $34.59  $34.33 
Common shares outstanding, net of treasury stock 42,444,106   42,439,439   42,369,908   42,275,264   42,250,092 
Tangible common equity ratio (non-GAAP)(1) 4.94%  5.56%  6.52%  7.84%  7.89%
          
Other Selected Trend Information          
Effective tax rate 19.97%  22.89%  21.95%  17.16%  19.15%
Full time equivalent employees 2,020   2,087   2,208   2,249   2,163 
          
Loans Held to Maturity         
Commercial and industrial$3,278,703  $3,059,519  $2,814,513  $2,645,085  $2,538,369 
Paycheck Protection Program ("PPP") 13,506   23,031   74,065   199,883   409,247 
Owner occupied commercial real estate 2,285,973   2,282,833   2,266,076   2,240,334   2,135,227 
Commercial and business lending 5,578,182   5,365,383   5,154,654   5,085,302   5,082,843 
Non-owner occupied commercial real estate 2,219,542   2,321,718   2,161,761   2,010,591   2,020,487 
Real estate construction 996,017   845,045   842,483   856,119   814,001 
Commercial real estate lending 3,215,559   3,166,763   3,004,244   2,866,710   2,834,488 
Total commercial lending 8,793,741   8,532,146   8,158,898   7,952,012   7,917,331 
Agricultural and agricultural real estate 781,354   836,703   766,443   753,753   684,670 
Residential mortgage 852,928   845,270   825,242   829,283   840,356 
Consumer 495,509   464,099   426,802   419,524   412,550 
Total loans held to maturity$10,923,532  $10,678,218  $10,177,385  $9,954,572  $9,854,907 
          
Total unfunded loan commitments$4,664,379  $4,458,874  $4,130,316  $3,830,219  $3,583,417 
          
(1) Refer to "Non-GAAP Measures" in this earnings release for additional information on the usage and presentation of these non-GAAP measures, and refer to these financial tables for the reconciliations to the most directly comparable GAAP measures.


HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
 As of and for the Quarter Ended
 9/30/2022 6/30/2022 3/31/2022 12/31/2021 9/30/2021
Allowance for Credit Losses-Loans         
Balance, beginning of period$101,353  $100,522  $110,088  $117,533  $120,726 
Provision (benefit) for credit losses 4,388   1,545   2,628   (6,808)  (4,448)
Charge-offs (938)  (1,473)  (13,217)  (1,953)  (1,167)
Recoveries 912   759   1,023   1,316   2,422 
Balance, end of period$105,715  $101,353  $100,522  $110,088  $117,533 
          
Allowance for Unfunded Commitments         
Balance, beginning of period$17,780  $16,079  $15,462  $13,967  $14,002 
Provision (benefit) for credit losses 1,104   1,701   617   1,495   (35)
Balance, end of period$18,884  $17,780  $16,079  $15,462  $13,967 
          
Allowance for lending related credit losses$124,599  $119,133  $116,601  $125,550  $131,500 
          
Provision for Credit Losses         
Provision (benefit) for credit losses-loans$4,388  $1,545  $2,628  $(6,808) $(4,448)
Provision (benefit) for credit losses-unfunded commitments 1,104   1,701   617   1,495   (35)
Provision (benefit) for credit losses-held to maturity securities             (51)
Total provision (benefit) for credit losses$5,492  $3,246  $3,245  $(5,313) $(4,534)
          
Asset Quality         
Nonaccrual loans$64,560  $62,909  $64,174  $69,369  $82,375 
Loans past due ninety days or more 678   95   246   550   861 
Other real estate owned 8,030   4,528   1,422   1,927   4,744 
Other repossessed assets       34   43   166 
Total nonperforming assets$73,268  $67,532  $65,876  $71,889  $88,146 
          
Performing troubled debt restructured loans$8,047  $1,350  $882  $817  $1,817 
          
Nonperforming Assets Activity          
Balance, beginning of period$67,532  $65,876  $71,889  $88,146  $91,729 
Net loan (charge offs)/recoveries (26)  (714)  (12,194)  (637)  1,255 
New nonperforming loans 8,388   8,590   15,832   5,886   6,908 
Reduction of nonperforming loans(1) (2,015)  (5,244)  (8,448)  (18,429)  (8,581)
Net OREO/repossessed assets sales proceeds and losses (611)  (976)  (1,203)  (3,077)  (3,165)
Balance, end of period$73,268  $67,532  $65,876  $71,889  $88,146 
          
Asset Quality Ratios         
Ratio of nonperforming loans to total loans 0.60%  0.59%  0.63%  0.70%  0.84%
Ratio of nonperforming loans and performing trouble debt restructured loans to total loans 0.67   0.60   0.64   0.71   0.86 
Ratio of nonperforming assets to total assets 0.37   0.34   0.34   0.37   0.46 
Annualized ratio of net loan charge-offs/(recoveries) to average loans    0.03   0.49   0.03   (0.05)
Allowance for loan credit losses as a percent of loans 0.97   0.95   0.99   1.11   1.19 
Allowance for lending related credit losses as a percent of loans 1.14   1.12   1.15   1.26   1.33 
Allowance for loan credit losses as a percent of nonperforming loans 162.05   160.87   156.04   157.45   141.20 
Loans delinquent 30-89 days as a percent of total loans 0.10   0.06   0.10   0.07   0.12 
          
(1) Includes principal reductions, transfers to performing status and transfers to OREO.


HEARTLAND FINANCIAL USA, INC.  
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS
 For the Quarter Ended
 September 30, 2022 June 30, 2022 September 30, 2021
 Average
Balance
 Interest Rate Average
Balance
 Interest Rate Average
Balance
 Interest Rate
Earning Assets                 
Securities:                 
Taxable$6,303,278  $45,648 2.87% $6,419,615  $38,098 2.38% $6,244,097  $32,384 2.06%
Nontaxable(1) 951,232   7,802 3.25   915,880   6,972 3.05   759,073   5,835 3.05 
Total securities 7,254,510   53,450 2.92   7,335,495   45,070 2.46   7,003,170   38,219 2.17 
Interest on deposits with other banks and short-term investments 222,170   1,081 1.93   277,773   563 0.81   322,430   132 0.16 
Federal funds sold 11                   
Loans:(2)                 
Commercial and industrial(1) 3,182,134   37,526 4.68   3,002,822   30,441 4.07   2,588,270   28,224 4.33 
PPP loans 17,859   363 8.06   41,370   1,801 17.46   602,675   11,186 7.36 
Owner occupied commercial real estate 2,272,666   23,601 4.12   2,294,524   22,863 4.00   1,990,538   20,048 4.00 
Non-owner occupied commercial real estate 2,258,424   25,895 4.55   2,179,048   22,871 4.21   1,964,609   22,129 4.47 
Real estate construction 914,520   12,382 5.37   878,555   10,015 4.57   835,976   9,591 4.55 
Agricultural and agricultural real estate 799,823   8,966 4.45   782,610   7,933 4.07   674,510   7,415 4.36 
Residential mortgage 858,119   8,665 4.01   849,174   8,358 3.95   855,734   9,068 4.20 
Consumer 479,590   6,028 4.99   449,265   4,949 4.42   407,735   4,889 4.76 
Less: allowance for credit losses-loans (102,031)      (102,902)      (121,823)    
Net loans 10,681,104   123,426 4.58   10,374,466   109,231 4.22   9,798,224   112,550 4.56 
Total earning assets 18,157,795   177,957 3.89%  17,987,734   154,864 3.45%  17,123,824   150,901 3.50%
Nonearning Assets 1,617,546       1,571,357       1,484,951     
Total Assets$19,775,341      $19,559,091      $18,608,775     
Interest Bearing Liabilities                 
Savings$10,059,652  $12,907 0.51% $9,995,497  $5,372 0.22% $8,364,326  $2,240 0.11%
Time deposits 1,156,908   2,251 0.77   1,088,765   1,158 0.43   1,097,126   1,204 0.44 
Short-term borrowings 134,974   360 1.06   118,646   88 0.30   139,001   98 0.28 
Other borrowings 371,492   4,412 4.71   372,411   3,808 4.10   280,897   3,102 4.38 
Total interest bearing liabilities 11,723,026   19,930 0.67%  11,575,319   10,426 0.36%  9,881,350   6,644 0.27%
Noninterest Bearing Liabilities                 
Noninterest bearing deposits 6,065,729       5,960,217       6,356,326     
Accrued interest and other liabilities 201,575       181,457       187,801     
Total noninterest bearing liabilities 6,267,304       6,141,674       6,544,127     
Equity 1,785,011       1,842,098       2,183,298     
Total Liabilities and Equity$19,775,341      $19,559,091      $18,608,775     
Net interest income, fully tax-equivalent (non-GAAP)(1)(3)  $158,027     $144,438     $144,257  
Net interest spread(1)    3.22%     3.09%     3.23%
Net interest income, fully tax-equivalent (non-GAAP)(1)(3) to total earning assets    3.45%     3.22%     3.34%
Interest bearing liabilities to earning assets 64.56%      64.35%      57.71%    
                  
(1) Computed on a tax-equivalent basis using an effective tax rate of 21%.  
(2) Nonaccrual loans and loans held for sale are included in the average loans outstanding.
(3) Refer to "Non-GAAP Measures" in this earnings release for additional information on the usage and presentation of these non-GAAP measures, and refer to these financial tables for the reconciliations to the most directly comparable GAAP measures.


HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS
 For the Nine Months Ended
 September 30, 2022 September 30, 2021
 Average
Balance
 Interest Rate Average
Balance
 Interest Rate
Earning Assets           
Securities:           
Taxable$6,407,459  $116,366 2.43% $5,935,295  $94,373 2.13%
Nontaxable(1) 990,784   22,625 3.05   743,534   17,308 3.11 
Total securities 7,398,243   138,991 2.51   6,678,829   111,681 2.24%
Interest bearing deposits with other banks and other short-term investments 238,819   1,715 0.96   266,701   258 0.13 
Federal funds sold 7       4,622   1 0.03 
Loans:(2)           
Commercial and industrial(1) 2,977,751   95,020 4.27   2,519,608   85,008 4.51 
PPP loans 63,342   6,487 13.69   879,489   32,521 4.94 
Owner occupied commercial real estate 2,270,486   67,742 3.99   1,876,929   59,710 4.25 
Non-owner occupied commercial real estate 2,166,873   69,929 4.31   1,961,016   65,984 4.50 
Real estate construction 880,354   31,673 4.81   819,452   28,501 4.65 
Agricultural and agricultural real estate 776,127   23,905 4.12   676,091   22,733 4.50 
Residential mortgage 850,444   25,108 3.95   844,337   28,153 4.46 
Consumer 452,032   15,632 4.62   404,384   15,408 5.09 
Less: allowance for credit losses-loans (105,477)      (127,718)    
Net loans 10,331,932   335,496 4.34   9,853,588   338,018 4.59 
Total earning assets 17,969,001   476,202 3.54%  16,803,740   449,958 3.58%
Nonearning Assets 1,554,432       1,487,704     
Total Assets$19,523,433      $18,291,444     
Interest Bearing Liabilities           
Savings$9,652,651  $20,673 0.29% $8,211,478  $6,903 0.11%
Time deposits 1,106,095   3,992 0.48   1,166,858   4,726 0.54 
Short-term borrowings 124,459   494 0.53   182,583   348 0.25 
Other borrowings 372,027   11,780 4.23   328,887   9,378 3.81 
Total interest bearing liabilities 11,255,232   36,939 0.44%  9,889,806   21,355 0.29%
Noninterest Bearing Liabilities           
Noninterest bearing deposits 6,172,984       6,104,058     
Accrued interest and other liabilities 182,677       180,752     
Total noninterest bearing liabilities 6,355,661       6,284,810     
Stockholders' Equity 1,912,540       2,116,828     
Total Liabilities and Stockholders' Equity$19,523,433      $18,291,444     
Net interest income, fully tax-equivalent (non-GAAP)(1)(3)  $439,263     $428,603  
Net interest spread(1)    3.10%     3.29%
Net interest income, fully tax-equivalent (non-GAAP)(1)(3) to total earning assets    3.27%     3.41%
Interest bearing liabilities to earning assets 62.64%      58.85%    
            
(1) Computed on a tax-equivalent basis using an effective tax rate of 21%.  
(2) Nonaccrual loans and loans held for sale are included in the average loans outstanding.
(3) Refer to "Non-GAAP Measures" in this earnings release for additional information on the usage and presentation of these non-GAAP measures, and refer to these financial tables for the reconciliations to the most directly comparable GAAP measures.


HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA AND FULL TIME EQUIVALENT EMPLOYEE DATA
 For the Quarter Ended
 9/30/2022 6/30/2022 3/31/2022 12/31/2021 9/30/2021
Reconciliation of Annualized Return on Average Tangible Common Equity (non-GAAP)         
Net income available to common stockholders (GAAP)$54,551  $49,861  $41,076  $47,568  $53,911 
Plus core deposit and customer relationship intangibles amortization, net of tax(1) 1,466   1,645   1,623   1,713   1,814 
Net income available to common stockholders excluding intangible amortization (non-GAAP)$56,017  $51,506  $42,699  $49,281  $55,725 
          
Average common equity (GAAP)$1,674,306  $1,731,393  $2,003,424  $2,061,973  $2,072,593 
Less average goodwill 576,005   576,005   576,005   576,005   576,005 
Less average core deposit and customer relationship intangibles, net 27,902   29,845   31,931   34,018   36,279 
Average tangible common equity (non-GAAP)$1,070,399  $1,125,543  $1,395,488  $1,451,950  $1,460,309 
Annualized return on average common equity (GAAP) 12.93%  11.55%  8.32%  9.15%  10.32%
Annualized return on average tangible common equity (non-GAAP) 20.76%  18.35%  12.41%  13.47%  15.14%
          
Reconciliation of Annualized Net Interest Margin, Fully Tax-Equivalent (non-GAAP)         
Net Interest Income (GAAP)$155,876  $142,461  $134,679  $137,194  $142,543 
Plus tax-equivalent adjustment(1) 2,151   1,977   2,119   1,975   1,714 
Net interest income, fully tax-equivalent (non-GAAP)$158,027  $144,438  $136,798  $139,169  $144,257 
          
Average earning assets$18,157,795  $17,987,734  $17,757,067  $17,681,917  $17,123,824 
          
Annualized net interest margin (GAAP) 3.41%  3.18%  3.08%  3.08%  3.30%
Annualized net interest margin, fully tax-equivalent (non-GAAP) 3.45   3.22   3.12   3.12   3.34 
Net purchase accounting discount amortization on loans included in annualized net interest margin 0.03   0.07   0.05   0.05   0.08 


Reconciliation of Tangible Book Value Per Common Share (non-GAAP)         
Common equity (GAAP)$1,545,253  $1,663,363  $1,821,152  $2,071,473  $2,061,547 
Less goodwill 576,005   576,005   576,005   576,005   576,005 
Less core deposit and customer relationship intangibles, net 26,995   28,851   30,934   32,988   35,157 
Tangible common equity (non-GAAP)$942,253  $1,058,507  $1,214,213  $1,462,480  $1,450,385 
          
Common shares outstanding, net of treasury stock 42,444,106   42,439,439   42,369,908   42,275,264   42,250,092 
Common equity (book value) per share (GAAP)$36.41  $39.19  $42.98  $49.00  $48.79 
Tangible book value per common share (non-GAAP)$22.20  $24.94  $28.66  $34.59  $34.33 
          
Reconciliation of Tangible Common Equity Ratio (non-GAAP)         
Tangible common equity (non-GAAP)$942,253  $1,058,507  $1,214,213  $1,462,480  $1,450,385 
          
Total assets (GAAP)$19,682,950  $19,658,399  $19,230,879  $19,274,549  $18,996,225 
Less goodwill 576,005   576,005   576,005   576,005   576,005 
Less core deposit and customer relationship intangibles, net 26,995   28,851   30,934   32,988   35,157 
Total tangible assets (non-GAAP)$19,079,950  $19,053,543  $18,623,940  $18,665,556  $18,385,063 
Tangible common equity ratio (non-GAAP) 4.94%  5.56%  6.52%  7.84%  7.89%
          
(1) Computed on a tax-equivalent basis using an effective tax rate of 21%.


HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
Reconciliation of Efficiency Ratio (non-GAAP)
For the Quarter Ended
9/30/2022 6/30/2022 3/31/2022 12/31/2021 9/30/2021
Net interest income (GAAP)$155,876  $142,461  $134,679  $137,194  $142,543 
Tax-equivalent adjustment(1) 2,151   1,977   2,119   1,975   1,714 
Fully tax-equivalent net interest income 158,027   144,438   136,798   139,169   144,257 
Noninterest income 29,181   34,539   34,569   32,730   32,724 
Securities (gains)/losses, net 1,055   2,089   (2,872)  (1,563)  (1,535)
Unrealized (gain)/loss on equity securities, net 211   121   283   27   (112)
Valuation adjustment on servicing rights       (1,658)  (502)  (195)
Adjusted revenue (non-GAAP)$188,474  $181,187  $167,120  $169,861  $175,139 
          
Total noninterest expenses (GAAP)$108,883  $106,479  $110,797  $115,386  $110,627 
Less:         
Core deposit and customer relationship intangibles amortization 1,856   2,083   2,054   2,169   2,295 
Partnership investment in tax credit projects 979   737   77   2,549   2,374 
(Gain)/loss on sales/valuation of assets, net (251)  (3,230)  46   214   (3)
Acquisition, integration and restructuring costs 2,156   2,412   576   1,989   204 
Core expenses (non-GAAP)$104,143  $104,477  $108,044  $108,465  $105,757 
Efficiency ratio, fully tax-equivalent (non-GAAP) 55.26%  57.66%  64.65%  63.86%  60.38%
          
Reconciliation of Annualized Ratio of Core Expenses to Average Assets (non-GAAP)         
Total noninterest expenses (GAAP)$108,883  $106,479  $110,797  $115,386  $110,627 
Core expenses (non-GAAP) 104,143   104,477   108,044   108,465   105,757 
          
Average assets$19,775,341  $19,559,091  $19,229,872  $19,151,691  $18,608,775 
Total noninterest expenses to average assets (GAAP) 2.18%  2.18%  2.34%  2.39%  2.36%
Core expenses to average assets (non-GAAP) 2.09%  2.14%  2.28%  2.25%  2.25%
          
Acquisition, integration and restructuring costs         
Salaries and employee benefits$365  $275  $340  $  $ 
Occupancy              
Furniture and equipment             7 
Professional fees 1,480   1,779   236   1,989   145 
Advertising 131   156         11 
(Gain)/loss on sales/valuations of assets, net             39 
Other noninterest expenses 180   202         2 
Total acquisition, integration and restructuring costs$2,156  $2,412  $576  $1,989  $204 
After tax impact on diluted earnings per common share(1)$0.04  $0.04  $0.01  $0.05  $ 
          
(1) Computed on a tax-equivalent basis using an effective tax rate of 21%.


HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
 For the Quarter Ended
September 30,
 For the Nine Months Ended
September 30,
  2022   2021   2022   2021 
Reconciliation of Annualized Return on Average Tangible Common Equity (non-GAAP)       
Net income available to common stockholders (GAAP)$54,551  $53,911  $145,488  $164,305 
Plus core deposit and customer relationship intangibles amortization, net of tax(1) 1,466   1,814   4,734   5,709 
Net income available to common stockholders excluding intangible amortization (non-GAAP)$56,017  $55,725  $150,222  $170,014 
        
Average common equity (GAAP)$1,674,306  $2,072,593  $1,801,835  $2,006,123 
Less average goodwill 576,005   576,005   576,005   576,005 
Less average core deposit and customer relationship intangibles, net 27,902   36,279   29,878   38,745 
Average tangible common equity (non-GAAP)$1,070,399  $1,460,309  $1,195,952  $1,391,373 
Annualized return on average common equity (GAAP) 12.93%  10.32%  10.80%  10.95%
Annualized return on average tangible common equity (non-GAAP) 20.76%  15.14%  16.79%  16.34%
        
Reconciliation of Annualized Net Interest Margin, Fully Tax-Equivalent (non-GAAP)       
Net Interest Income (GAAP)$155,876  $142,543  $433,016  $423,366 
Plus tax-equivalent adjustment(1) 2,151   1,714   6,247   5,237 
Net interest income, fully tax-equivalent (non-GAAP)$158,027  $144,257  $439,263  $428,603 
        
Average earning assets$18,157,795  $17,123,824  $17,969,001  $16,803,740 
        
Annualized net interest margin (GAAP) 3.41%  3.30%  3.22%  3.37%
Annualized net interest margin, fully tax-equivalent (non-GAAP) 3.45   3.34   3.27   3.41 
Purchase accounting discount amortization on loans included in annualized net interest margin 0.03   0.08   0.05   0.10 
        
(1) Computed on a tax-equivalent basis using an effective tax rate of 21%.


HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
Reconciliation of Efficiency Ratio (non-GAAP)
For the Quarter Ended
September 30,
 For the Nine Months Ended
September 30,
 2022   2021   2022   2021 
Net interest income (GAAP)$155,876  $142,543  $433,016  $423,366 
Tax-equivalent adjustment(1) 2,151   1,714   6,247   5,237 
Fully tax-equivalent net interest income 158,027   144,257   439,263   428,603 
Noninterest income 29,181   32,724   98,289   96,205 
Securities (gains)/losses, net 1,055   (1,535)  272   (4,347)
Unrealized (gain)/loss on equity securities, net 211   (112)  615   (85)
Valuation adjustment on servicing rights    (195)  (1,658)  (586)
Adjusted revenue (non-GAAP)$188,474  $175,139  $536,781  $519,790 
        
Total noninterest expenses (GAAP)$108,883  $110,627  $326,159  $316,426 
Less:       
Core deposit and customer relationship intangibles amortization 1,856   2,295   5,993   7,226 
Partnership investment in tax credit projects 979   2,374   1,793   3,754 
(Gain)/loss on sales/valuation of assets, net (251)  (3)  (3,435)  374 
Acquisition, integration and restructuring costs 2,156   204   5,144   3,342 
Core expenses (non-GAAP)$104,143  $105,757  $316,664  $301,730 
Efficiency ratio, fully tax-equivalent (non-GAAP) 55.26%  60.38%  58.99%  58.05%
        
Reconciliation of Annualized Ratio of Core Expenses to Average Assets (non-GAAP)       
Total noninterest expenses (GAAP)$108,883  $110,627  $326,159  $316,426 
Core expenses (non-GAAP) 104,143   105,757   316,664   301,730 
        
Average assets$19,775,341  $18,608,775  $19,523,433  $18,291,444 
Total noninterest expenses to average assets (GAAP) 2.18%  2.36%  2.23%  2.31%
Core expenses to average assets (non-GAAP) 2.09%  2.25%  2.17%  2.21%
        
Acquisition, integration and restructuring costs       
Salaries and employee benefits$365  $  $980  $578 
Occupancy          10 
Furniture and equipment    7      655 
Professional fees 1,480   145   3,495   878 
Advertising 131   11   287   173 
(Gain)/loss on sales/valuations of assets, net    39      39 
Other noninterest expenses 180   2   382   1,009 
Total acquisition, integration and restructuring costs$2,156  $204  $5,144  $3,342 
After tax impact on diluted earnings per common share(1)$0.04  $  $0.10  $0.06 
 
(1) Computed on a tax-equivalent basis using an effective tax rate of 21%.


CONTACT:
Bryan R. McKeag 
Executive Vice President 
Chief Financial Officer 
(563) 589-1994 
BMcKeag@htlf.com


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